| High-technology industries have experienced different fortunes on the global stage. In a global economy, how is innovation in high-technology industries influenced by foreign and domestic challenges and opportunities? What is the role of domestic and foreign research and development (R&D) and international trade in contributing to the rise or demise of an industry?; This dissertation addresses these important questions by combining empirical analysis with detailed consideration of technological innovation and industry specific conditions. The empirical analysis builds on the theoretical framework of the Grossman and Helpman model which relates total factor productivity (TFP), a widely used measure of the beneficial outcome of innovation, to both domestic and foreign sources of knowledge and to international trade. Data on TFP and domestic R&D, foreign R&D, imports and exports are assembled at the three-digit level over the period 1973--1996 for four dynamic, high-technology industries: computer equipment (SIC 357); communications equipment (SIC 366); scientific and industrial instruments (SIC 381 + 382); and household audio and video equipment (SIC 365). These industries represent a range of technological maturity and competitiveness on the global stage, allowing us to exploit critical differences among the industries to better characterize the multifaceted relationship between globalization and domestic innovation.; The results highlight the importance of considering international trade and foreign R&D together in order to understand the consequences for domestic innovation. Some of the main insights are: (1) Foreign R&D can have opposite effects which are mediated through international trade. Foreign R&D can serve as a source of knowledge and contribute to domestic innovation, as in scientific instruments. However, foreign R&D also is associated with sophisticated competition which can overwhelm the domestic industry, as in household audio and video equipment. (2) The challenge of sophisticated imports can spur domestic innovation, as in communications equipment, but also can lead to retreat. (3) Exporting to technically advanced markets can contribute to domestic innovation in a strong industry, as in computer equipment and scientific instruments, but can also be a challenge when technologically advanced competitors are present, as in communications equipment. (4) Distinct industry characteristics, including historical development, regulation, and standards matter. These findings also have implications for a broad class of high-technology industries. |
